Tuesday, December 15, 2009

Duty-free privileges key to Ayala Land’s Olongapo development plan

SUBIC BAY FREE PORT— The tax- and duty-free regime that has made this free port one of the biggest generators of foreign direct investment in the country would also be crucial to the realization of a 7,000-sq-meter Ayala Land development project in this free port and nearby Olongapo City.

Armand Arreza, administrator of the Subic Bay Metropolitan Authority (SBMA), said the project proponent has stressed that Subic’s tax- and duty-free privileges would be “a key component in realizing the P3-billion development project proposed by Ayala Land Inc. [ALI].”

According to ALI president and CEO Anthony Aquino, fiscal incentives like Subic’s minimal 5-percent gross income tax, if successfully extended to the 7,000-sq-meter Olongapo City Central Business District (CBD) Triangle, “would set the stage for robust trade in the area.” He added that the tax- and duty-free incentives would be part of the package that the developer could offer to prospective investors and business locators.

Aquino also said that the developer is eyeing the participation of businessmen from Olongapo for the proposed CBD Triangle project, adding that local investments would be the “lifeblood of this development.”

Arreza said he has assured Aquino that tax- and duty-free perks will be applied to the CBD project as soon as President Arroyo approves the implementing rules and regulations (IRR) of Executive Order (EO) 675.

Arreza also said that the IRR for EO 675 has become a collaborative work of the SBMA and the Bureau of Customs (BOC) office in this free port.

The IRR details the process of identifying, administering and regulating the areas where said incentives can be extended, he added.

Arroyo signed the said EO on Nov. 5, 2007, citing the need to expand the area where Subic’s tax- and duty-free privileges would apply.

Arreza said that EO 675 provides that tax- and duty-free privileges within the Subic Special Economic and Free Port Zone “shall apply within the secured area consisting of the presently fenced-in former Subic Naval Base and such other areas that may be identified, fenced, secured, or declared as additional secured area by the SBMA.”

“Once the President gives her approval, it is up to the city of Olongapo to decide what particular incentives to offer,” he said.

Arreza, Aquino and Olongapo City Mayor James Gordon Jr. signed a Memorandum of understanding last week for the proposed Olongapo CBD Triangle project.

Under the agreement, ALI will commission the master plan for free, granted that the Olongapo government would give ALI the option to develop or purchase, subject to applicable laws, the city’s properties inside the 7,000-sq-meter project area.

Arreza, who has pushed for the expansion of Subic’s free-port regime to nearby communities, said the proposed project will be the first step in the agency’s push to develop areas beyond Subic’s secured area.

The project is expected to boost Subic’s drive to gain more investments and create more livelihood opportunities for local residents.

Arreza also said that among the incentives offered to Subic business locators are tax- and duty-free importation; exemption from all local and national taxes, with only a 5-percent corporate tax on gross income; unrestricted entry of foreign investments; no foreign exchange control; visas for foreign nationals; and expanded allowable deduction and higher percentage of income allowable from sources within the Customs territory for regional enterprises. Written by Henry Empeño / Business Mirror

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16 January 2012